Abstract
This paper analyzes the effect on bureaucratic slack of letting a sponsor apply a simple frontier-model in the budgetary process. The relationship between the sponsor and the bureaus is described within a simple game theoretic framework in which the sponsor is given the option of utilizing the frontier-technology when allocating a fixed budget to the bureaus. The effect on bureaucratic slack is shown to be ambiguous. However, conditions under which the sponsor benefits from applying the frontier-model are identified. It is also shown that collusion between bureaus does not destroy the possible benefit of applying the frontier-model.
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Dalen, D.M. Strategic responses to frontier-based budget allocation: Implications for bureaucratic slack. J Prod Anal 7, 29–39 (1996). https://doi.org/10.1007/BF00158475
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DOI: https://doi.org/10.1007/BF00158475